“When an investment adviser echoes another firm’s performance claims in its own advertisements, it must verify the information first rather than merely accept it as fact”, said Andrew J. Ceresney, director of the SEC Enforcement Division. The amendments will improve the quality of information that investment advisers provide to investors and the Commission. Although there is a long lead-in time to get in compliance with the new rules and Form ADV, advisers should consider beginning work now to ensure compliance by next year.
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The top USA securities regulator said on Thursday it would require more information from investment advisers about their separately managed account businesses, as it continues to tighten oversight on the sector. Other modifications will streamline registration and reporting for groups of private fund advisers that operate as a single advisory firm.
Amendments to Investment Advisers Act Rule 204-2 will require advisers to maintain additional records related to the calculation and distribution of performance information. That will make it easier for the Securities and Exchange Commission to identify fraudulent advertising and pursue misleading claims.
The amendments become effective 60 days after publication of the adopting release in the Federal Register.
The advisers, however, did not obtain sufficient documentation to substantiate the information that F-Squared advertised, the SEC said. They will become effective 60 days after publication in the Federal Register, and advisers will need to begin complying with the amendments on October 1, 2017. She appreciates that, as the IAA recommended, the SEC raised the threshold from $150 million to $500 million in separately managed accounts for advisers to report clients’ use of derivative.
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The adopted amendments will require advisers to aggregate information about the separately managed accounts they advise and, according to the adopting release, are created to improve the depth and quality of the information collected by the SEC.
